California approves major electricity rate changes

State officials voted unanimously to raise electricity rates for millions of Californians on Friday, over the objections of consumer advocates and environmental groups who called the plan a giveaway to the wealthy and said it would discourage people from saving energy and going solar.

The controversial changes were a long time coming. For years, Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric have wanted to raise rates for those who use the least and lower rates for those who use the most, and the California Public Utilities Commission made it happen in a 5-0 vote.

The plan approved Friday also leaves the door open for new fixed charges, another utility industry goal.

Edison and other electricity providers have argued that current rates unfairly penalize high-usage customers, and that low-usage customers aren’t paying their fair share. Utility companies have also said that all customers, including solar customers, need to pay more to keep the electric grid running — hence the need for higher fixed charges.

Consumer advocates agree that some changes are needed to make rates more fair. But they criticized the plan passed Friday as a sign that the public utilities commission isn’t looking out for the best interests of the public.

“This is a lose-lose for customers, but business as usual for the CPUC, which has once again done PG&E, Edison and SDG&E’s bidding,” Mark Toney, executive director of The Utility Reform Network, a San Francisco-based ratepayer advocacy group, said in a statement.

Edison’s residential customers currently pay for electricity in four tiers, with energy use in the fourth tier costing more than twice as much as in the first tier. That stark difference, consumer advocates say, motivates people to save energy, and gives high-usage customers a financial incentive to invest in energy efficiency and rooftop solar.

Under the changes approved Friday, the difference between what high-usage customers and low-usage customers pay will shrink. By 2019, the number of tiers will be reduced from four to two, with a price difference of just 25% between them.

Critics say those changes amount to a redistribution of wealth from low-income to high-income families, arguing that wealthier people tend to use the most energy.

In explaining their votes at Friday’s meeting, several commissioners said the link between income and electricity use isn’t as well-established as critics believe. Many high-usage customers, they said, are simply large families living in small homes, or low-income desert residents who need constant air conditioning to stay cool during the summer.

There will also be a “surcharge” for the highest-usage customers, a last-minute addition by commission President Michael Picker to mollify Commissioner Mike Florio and other critics of his original, utility-backed proposal. Under that surcharge, the most excessive electricity use will be billed at more than twice the rate of low-end electricity use.

Critics, though, weren’t convinced that the surcharge would make much difference, since it would only apply to electricity use more than 400% above baseline. The public utilities commission estimated that it would only apply to 10% of Edison customers, and only then to the top 4% of actual electricity use.

The plan passed Friday would also delay new fixed charges sought until at least 2020. But it lays the groundwork for utility companies to make a new case for those charges.

Additionally it switches all Edison, PG&E and SDG&E residential customers to “time-of-use” electricity rates starting in 2019. Under those rates, the cost of electricity will depend on the time of day — and time of year — that you use it.

Several commissioners repeatedly emphasized that the commission will have many more changes to encourage conservation and solar over the next few years, including an ongoing proceeding to revamp the solar incentive program known as “net energy metering.”

Consumer advocates, though, weren’t convinced that the commission would follow through on those promises.

“It’s hard not to look at the commission’s track record and look at the repeated attempts to fast-track power plants in lieu of clean energy,” said Evan Gillespie, western region deputy director of the Sierra Club’s Beyond Coal Campaign.

Sammy Roth writes about energy and water for The Desert Sun. He can be reached at sammy.roth@desertsun.com, (760) 778-4622 and @Sammy_Roth.